BACKGROUND: Knowledge of working capacity from adolescence until adulthood among severely disturbed in-patients is scarce. METHOD: In a follow-up study of 61 adolescent in-patients, we studied associations between being on a disability pension 20 years after hospitalisation, and the patients' psychopathology and treatment-related factors during the hospitalisation and seven-year follow-up. RESULTS: Of the former in-patients, 27% had not been on a disability pension, 20% had short-term pension periods, and 53% were pensioned. Subjects whose overall psychosocial functioning had improved and who had not utilised in-patient services until the seven-year follow-up, had a better prognosis in terms of working capacity. Half of the subjects who had not been on pension during the follow-up had received a diagnosis of conduct disorder at discharge, and half of those pensioned had a psychotic disorder. CONCLUSIONS: The patients' level of psychosocial functioning and capability to work in young adulthood were associated with long-term prognosis in terms of working capacity. Adolescence seems to be the critical time for intensive psychiatric care combined with vocational rehabilitation programmes.